Correlation Between IShares Core and Lord Abbett
Can any of the company-specific risk be diversified away by investing in both IShares Core and Lord Abbett at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining IShares Core and Lord Abbett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core SP and Lord Abbett Bond, you can compare the effects of market volatilities on IShares Core and Lord Abbett and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in IShares Core with a short position of Lord Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Lord Abbett.
Diversification Opportunities for IShares Core and Lord Abbett
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IShares and Lord is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and Lord Abbett Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lord Abbett Bond and IShares Core is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on iShares Core SP are associated (or correlated) with Lord Abbett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lord Abbett Bond has no effect on the direction of IShares Core i.e., IShares Core and Lord Abbett go up and down completely randomly.
Pair Corralation between IShares Core and Lord Abbett
Given the investment horizon of 90 days iShares Core SP is expected to generate 3.32 times more return on investment than Lord Abbett. However, IShares Core is 3.32 times more volatile than Lord Abbett Bond. It trades about 0.05 of its potential returns per unit of risk. Lord Abbett Bond is currently generating about 0.02 per unit of risk. If you would invest 8,852 in iShares Core SP on January 26, 2024 and sell it today you would earn a total of 2,266 from holding iShares Core SP or generate 25.6% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 99.8% |
Values | Daily Returns |
iShares Core SP vs. Lord Abbett Bond
Performance |
Timeline |
iShares Core SP |
Lord Abbett Bond |
IShares Core and Lord Abbett Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with IShares Core and Lord Abbett
The main advantage of trading using opposite IShares Core and Lord Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, Lord Abbett can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Lord Abbett will offset losses from the drop in Lord Abbett's long position.IShares Core vs. SPDR MSCI EAFE | IShares Core vs. SPDR MSCI Emerging | IShares Core vs. SPDR Russell 1000 | IShares Core vs. SPDR Russell 1000 |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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